Most people are like me when it comes to investing money: they don't think they know squat about how to do it from the Stock Markets.
Which is quite surprising, considering how many of us have our money in a 401(k), and a lot of that money is in those Markets.
So it's at times like this, when the housing market is going south like ducks in winter and grocery prices are making every-day inflation look like the 1970s, that I will turn to the words of Warren Buffett, one of the richest men on the face of the Earth (thanks to those Markets):
We just try to do smart things every day, and if there's nothing smart, then we sit on cash.
I have a 401(k) plan, and today I received confirmation that I have moved the majority of it into options with a guaranteed rate of return. Bonds, in other words. Did it all online, easy as pie.
And I won't be putting that share into the Stock Markets again until we get a Democratic President, at least.
Here's how I figure it: I didn't have all my eggs in one basket to begin with. I had my 401(k) split over five options: stuff like T.Rowe Price, S&P 500, tech stocks. But seeing as they have all taken a tumble and remained pretty-well stagnant for years, I'd rather have piece of mind.
Add to that the feeling of déjà vu. Remember 1982? Unemployment sneaking up, people losing their property to foreclosures, businesses failing, our imports-to-exports ratio getting bigger.
Sounds awfully familiar, if you ask me. Sounds like we're repeating the initial parameters of an experiment that ends in recession. I remember the recession in the early 90s too ...there was a lot of see-sawing of the Market prices, as experts forecast the downturn to come.
So, that's it. I'm mostly out of the Markets (30% stocks, 70% bonds) until we get a fiscally responsible Democratic President. At least. I'll let the markets take their tumbles (and they will tumble), then I'll switch back to stocks when it hits rock bottom and I'll still have the value of my retirement investment intact. I may only gain a few percent, but breaking even beats losing 10%, 15%, 20%...
It makes sense to wait until we get a decent fiscal plan for the country. Yes, I know the catchphrases: investing is a marathon, not a sprint ...but Warren Buffett has made more money than anyone but Bill Gates in the history of Mankind, and if he's worth over $50 billion and he says to sit on the cash because there's nothing smart in the 401(k) environment, that's what I will do.
To use the whole race analogy, and expand on it: seeing as we're coming to a muddy, bogged-down part of the race, it also makes sense to wait until the mud dries. Or switch to a drier path. I'm just making sure I finish the race with less mud on me than most other people.
I advise you all to do the same, if you have a 401(k). There'll be plenty of sob stories from people that didn't spend the three minutes in reallocating their investments (and it cost them thousands). It'll be the most productive 180 seconds of your life. Don't leave it to chance. Make sure your hand's on that lifeboat.
Do it now.